-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, B5X0lJwcNyuy9+NN5NTX70xQYt7IqB2pZjZJMR8PwGzlP0k6qZoiR8ObRlIFegDP cQlidyEgu1NyQPeoTCtgHQ== 0000023082-95-000006.txt : 19950517 0000023082-95-000006.hdr.sgml : 19950517 ACCESSION NUMBER: 0000023082-95-000006 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19941230 FILED AS OF DATE: 19950210 SROS: NYSE SROS: PSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: COMPUTER SCIENCES CORP CENTRAL INDEX KEY: 0000023082 STANDARD INDUSTRIAL CLASSIFICATION: 7373 IRS NUMBER: 952043126 STATE OF INCORPORATION: NV FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-04850 FILM NUMBER: 95508791 BUSINESS ADDRESS: STREET 1: 2100 E GRAND AVE CITY: EL SEGUNDO STATE: CA ZIP: 90245 BUSINESS PHONE: 3106150311 10-Q 1 10Q 3RD QTR FY95 Form 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934 QUARTER ENDED DECEMBER 30, 1994 Commission File No. 1-4850 COMPUTER SCIENCES CORPORATION Incorporated in the State of Nevada Employer Identification No. 95-2043126 2100 East Grand Avenue El Segundo, California 90245 Telephone (310) 615-0311 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] 50,990,834 shares of Common Stock, $1.00 par value, were outstanding on December 30, 1994. COMPUTER SCIENCES CORPORATION Index to Form 10-Q Page Number Part I. Financial Information Consolidated Condensed Balance Sheets - December 30, 1994 and April 1, 1994 3 Consolidated Condensed Statements of Income - Third quarter and nine months ended December 30, 1994 and December 31, 1993 4 Consolidated Condensed Statements of Cash Flows - Nine months ended December 30, 1994 and December 31, 1993 5 Notes to Consolidated Condensed Financial Statements 6 Management's Discussion and Analysis of Results of Operations and Financial Condition 8 Part II. Other Information Item 6 - Exhibits and Reports on Form 8-K 11 Signatures 12 Exhibits: Exhibit 11 - Calculation of Earnings Per Share Exhibit 27 - Financial Data Schedule Exhibit 28 - Additional Information - Revenues by Market Sector -2- PART I. FINANCIAL INFORMATION COMPUTER SCIENCES CORPORATION CONSOLIDATED CONDENSED BALANCE SHEETS ($ in thousands)
ASSETS Dec. 30, April 1, 1994 1994 (unaudited) CURRENT ASSETS: Cash and cash equivalents $28,479 $126,820 Receivables 802,365 665,253 Prepaid expenses and other current assets 85,005 65,046 ___________ ___________ Total current assets 915,849 857,119 ___________ ___________ PROPERTY AND EQUIPMENT, at cost 809,253 695,796 Less-Accumulated depreciation and amortization 364,600 302,760 ___________ ___________ Net property and equipment 444,653 393,036 ___________ ___________ EXCESS OF COST OF BUSINESSES ACQUIRED OVER RELATED NET ASSETS, NET 360,139 324,145 OTHER ASSETS 239,485 232,080 ___________ ___________ $1,960,126 $1,806,380
LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Short-term debt $169,176 $17,772 Current maturities of long-term debt 10,373 32,685 Accounts payable 105,120 228,674 Accrued payroll and related costs 147,555 128,478 Other accrued expenses 169,765 175,005 Advance contract payments 29,132 24,454 Income taxes payable 50,469 54,176 ___________ ___________ Total current liabilities 681,590 661,244 ___________ ___________ LONG-TERM DEBT, NET 309,009 273,344 ___________ ___________ OTHER LONG-TERM LIABILITIES 71,326 66,112 ___________ ___________ STOCKHOLDERS' EQUITY (Note A): Common stock issued, par value $1.00 per share 51,205 50,807 Other stockholders' equity 846,996 754,873 ___________ ___________ Total stockholders' equity 898,201 805,680 ___________ ___________ $1,960,126 $1,806,380 See accompanying notes. -3-
COMPUTER SCIENCES CORPORATION CONSOLIDATED CONDENSED STATEMENTS OF INCOME (unaudited) ($ in thousands except earnings per share)
Third Quarter Ended Nine Months Ended _____________________ _________________________ Dec. 30, Dec. 31, Dec. 30, Dec. 31, 1994 1993 1994 1993 _________ _________ ___________ ___________ Revenues $827,901 $621,361 $2,354,532 $1,851,767 _________ _________ ___________ ___________ Costs of services 661,815 494,176 1,877,354 1,494,737 Selling, general and administrative 73,471 56,121 223,567 159,640 Depreciation and amortization 41,812 33,292 119,644 93,369 Interest, net (Note B) 7,475 2,811 18,470 7,773 _________ _________ ___________ ___________ Total costs and expenses 784,573 586,400 2,239,035 1,755,519 _________ _________ ___________ ___________ Income before taxes 43,328 34,961 115,497 96,248 Taxes on income 16,580 13,285 44,004 38,143 _________ _________ ___________ ___________ Net earnings before cumulative effect of accounting change 26,748 21,676 71,493 58,105 Cumulative effect of accounting change for income taxes (Note C) 4,900 _________ _________ ___________ ___________ Net earnings $26,748 $21,676 $71,493 $63,005 ========= ========= =========== =========== Earnings per common share before cumulative effect of accounting change $0.51 $0.42 $1.37 $1.14 Cumulative effect of accounting change for income taxes (Note C) 0.09 _________ _________ ___________ ___________ Earnings per common share (Notes A and D) $0.51 $0.42 $1.37 $1.23 ========= ========= =========== =========== See accompanying notes. -4-
COMPUTER SCIENCES CORPORATION CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (unaudited) ($ in thousands)
Nine Months Ended _________________________ Dec. 30, Dec.31, 1994 1993 ___________ ___________ Cash flows from operating activities: Net earnings $71,493 $63,005 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization 119,644 93,369 Provision for losses on accounts receivable 11,436 5,085 Changes in assets and liabilities, net of effects of acquisitions: Increase in assets (170,974) (27,203) Decrease in liabilities (4,807) (10,735) ___________ ___________ Net cash provided by operating activities 26,792 123,521 ___________ ___________ Investing activities: Short-term investments 18,229 Purchase of property, plant and equipment (149,289) (89,799) Purchased and internally developed software (12,190) (24,123) Acquisitions, net of cash acquired (22,159) (96,750) Other investing cash flows (4,158) 2,570 ___________ ___________ Net cash used in investing activities (187,796) (189,873) ___________ ___________ Financing activities: Paydown of commercial paper, net (1,941) Borrowings under lines of credit, net 50,339 6,780 Proceeds from term debt issuance 150,000 Payment of outsourcing financing (114,403) Principal payments on long-term debt (42,143) (10,509) Proceeds from exercise of stock options 11,858 13,337 Other financing cash flows 8,953 62 ___________ ___________ Net cash provided by financing activities 62,663 9,670 ___________ ___________ Net decrease in cash and cash equivalents (98,341) (56,682) Cash and cash equivalents at beginning of year 126,820 111,477 ___________ ___________ Cash and cash equivalents at end of period $28,479 $54,795 =========== =========== See accompanying notes. -5-
COMPUTER SCIENCES CORPORATION NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS ($ in thousands except per share amounts) (A) On December 6, 1993, the Company's Board of Directors declared a three-for-one stock split in the form of a 200 percent stock dividend on the Company's common stock, with no change in par value. The dividend was distributed January 13, 1994 to shareholders of record as of December 22, 1993. All per share amounts contained in the statements of income and the accompanying notes are based on the new number of shares. No other dividends were paid or declared during the periods presented. There were 51,204,677 shares at December 30, 1994 and 50,807,452 shares at April 1, 1994 of $1.00 par value common stock issued with 213,843 and 201,752 shares, respectively, of treasury stock. (B) Interest, net consists of the following: 3rd Quarter Ended Nine Months Ended ------------------ ------------------ Dec 30, Dec 31, Dec 30, Dec 31, 1994 1993 1994 1993 -------- -------- -------- -------- Interest income $ (401) $(1,756) $(1,694) $(5,145) Interest expense 7,876 4,567 20,164 12,918 -------- -------- -------- -------- Total $ 7,475 $ 2,811 $18,470 $ 7,773 ======== ======== ======== ======== (C) The Company adopted Statement of Financial Accounting Standards (SFAS) No. 109, "Accounting for Income Taxes," effective April 3, 1993. The cumulative financial statement effect of adopting SFAS No. 109 was to increase the Company's net earnings by $4.9 million, or $0.09 per share for the quarter ended July 2, 1993. (D) Primary earnings per common share are based on the weighted average number of common stock and common stock equivalent shares (dilutive stock options) outstanding of 52,334,000 and 51,186,000 respectively, for the nine months ended December 30, 1994, and December 31, 1993 (see Part II - Exhibit 11). (E) Cash payments for interest on indebtedness were $17,034 and $13,799, respectively, for the nine months ended December 30, 1994, and December 31, 1993. Cash payments for taxes on income were $38,769 and $44,502, respectively, for the nine months ended December 30, 1994, and December 31, 1993. -6- (F) During the second quarter, the Company, through its affiliate, CSC Enterprises, renewed the credit agreements which provide standby support for its commercial paper program. The new standby agreements expire during September 1995 and September 1998 in the amounts of $100 million and $150 million, respectively. In accordance with the standby agreements in place, on December 30, 1994, $100 million of commercial paper was classified as short-term debt, versus none on April 1, 1994. (G) Several items arose subsequent to the end of the fiscal quarter. The Company has entered into an outsourcing agreement with Hughes Aircraft Company ("Hughes") effective January 28, 1995. The Company estimates that this agreement will generate an additional $1.3 billion of revenue over its initial eight-year term. On January 2, 1995, the Company acquired a majority interest in Ploenzke AG, a German computer services firm with annual revenues of approximately $170 million. On January 3, 1995, the Company borrowed $100 million to fund the acquisition of certain assets under the Hughes outsourcing agreement and the acquisition of Ploenzke AG. On January 13, 1995, the Company filed a Form S-3 registration statement with the Securities and Exchange Commission for the sale of 4 million shares of its common stock. The proceeds from the sale will be added to the general funds of the Company and will be used for general corporate purposes. Pending such application, the Company intends to use the proceeds to reduce indebtedness temporarily and invest in short-term instruments. (H) The financial information reported, which is not necessarily indicative of the results for a full year, is unaudited but includes all adjustments which the Company considers necessary for a fair presentation. All such adjustments are normal recurring adjustments. -7- MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION Third Quarter of Fiscal 1995 Versus Third Quarter of Fiscal 1994 Revenues During the quarter ended December 30, 1994, the Company's total revenues of $827.9 million increased 33.2%, or $206.5 million, over the same period last year. Federal revenue totaled $367.8 million, up 29.6% from last year's $283.8 million due to the acquisition during December, 1993 of Atlantic Research Corporation's Professional Services Group (PSG) and the commencement since the prior year third quarter of a number of contracts, including the provision of information systems support to the NASA Marshall Space Flight Center. Commercial revenue from domestic operations was $285 million for the third quarter versus $255.4 million for the prior year quarter, with growth in consulting revenues offset by a slight decrease in outsourcing revenues from existing outsourcing contracts as service efficiencies were achieved. International revenue increased to $175.1 million from $82.2 million reflecting the commencement of the Company's outsourcing contract with British Aerospace (BAe) during April, 1994, the acquisition of Computer Sciences Australia (CSA) during November, 1993 and other revenue growth. During the current fiscal year, the Company has been awarded federal contracts, including the Marshall Space Flight Contract mentioned above, that it estimates will generate approximately $1.5 billion of revenues over their terms, and commercial outsourcing contracts that will generate approximately $2 billion of revenues over their terms. Costs and Expenses As a percentage of revenue, costs of services were 79.9% for the quarter ended December 30, 1994, versus 79.5% for the same quarter last year. An increase for the Company's federal and U.S. outsourcing operations was partially offset by improvements for other U.S. commercial and international activities. Selling, general and administrative expenses increased to $73.5 million for the quarter ended December 30, 1994, up from $56.1 million for the same period last year. The largest increases were in the Company's outsourcing and consulting operations due to increased marketing and proposal costs as the Company pursued new business opportunities. -8- The Company's depreciation and amortization expense increased to $41.8 million for the current quarter, up from $33.3 million last year. The increase is primarily the result of the BAe contract and PSG and CSA acquisitions, as well as other internal business growth. Net interest expense increased to $7.5 million for the current quarter from $2.8 million for the same quarter last year. The increase is due to both decreased interest income and increased interest expense as cash on hand and increased borrowings were used to supplement cash flows from operations. The increased borrowings helped to fund the purchase of outsourcing assets from BAe and to acquire CSA and PSG during the second quarter of fiscal 1994. Income Before Taxes Income before taxes was $43.3 million, up $8.4 million or 23.9% over last year's third quarter, reflecting the revenue growth achieved, offset somewhat by the growth in costs of services and higher net interest expense described above. Net Earnings Net earnings were $26.7 million for the quarter ended December 30, 1994, up $5.1 million or 23.4% over the same quarter last year. The effective tax rate was 38.3%, versus 38% for the prior period. Third quarter earnings per share were 51 cents, compared to 42 cents for the prior period, on a greater number of shares outstanding. Cash Flows Cash flows from operating activities were $26.8 million for the nine months ended December 30, 1994, compared to $123.5 million during the same period last year. The lower operating cash flow is mainly the result of higher accounts receivable and other current assets related to the Company's increased federal and international operations. The Company's cash outflows for investing activities were $187.8 million for the nine months versus $189.9 million during the same period last year. Purchases of property, plant and equipment were higher, in keeping with company growth, particularly in the asset- intensive area of information technology outsourcing. There was also an absence of short-term investment purchases compared to last year. These factors were partially offset by lower acquisition- related expenditures. -9- Cash provided by financing activities was $62.7 million for the nine months versus $9.7 million during the same period last year. Year-to-date activity includes the payment of $114 million of BAe outsourcing financing. Additionally, a $150 million private placement of fixed-rate, term debt was issued by CSC Enterprises, an affiliate of the Company. The proceeds of this placement were initially used to repay commercial paper borrowings which have been subsequently re-borrowed. Financial Condition During the first nine months of fiscal 1995, the Company's capital needs included $114 million for the payment related to the BAe outsourcing contract and $176 million for additional working capital. These needs were met by the use of operating cash flow, existing cash and additional debt. As a result of the additional borrowing, the Company's debt-to-total-capitalization ratio increased to 35% at December 30, 1994, versus 29% at the prior fiscal year-end. In all other respects, the Company's financial condition has not changed significantly since the fiscal year-end. It is management's opinion that the Company will be able to fund its cash needs from operating activities and from short-term borrowings. It is also management's opinion that any major additional requirements can be financed by the use of unused borrowing capacity or by the issuance of new CSC securities. Subsequent Events Several items arose subsequent to the end of the fiscal quarter. The Company has entered into an outsourcing agreement with Hughes Aircraft Company ("Hughes") effective January 28, 1995. The Company estimates that this agreement will generate an added $1.3 billion of revenue over its initial eight-year term, in addition to projected revenue of $200 million under the superseded pre-existing agreement with a Hughes affiliate. On January 2, 1995, the Company acquired a majority interest in Ploenzke AG, a German computer services firm with annual revenues of approximately $170 million. On January 3, 1995, the Company borrowed $100 million to fund the acquisition of certain assets under the Hughes outsourcing agreement and the acquisition of Ploenzke AG. On January 13, 1995, the Company filed a Form S-3 registration statement with the Securities and Exchange Commission for the sale of 4 million shares of its common stock. The proceeds from the sale will be added to the general funds of the Company and will be used for general corporate purposes. Pending such application, the Company intends to use the proceeds to reduce indebtedness temporarily and invest in short-term instruments. -10- Part II. Other Information Item 6. Exhibits and Reports on Form 8-K a. Exhibits Exhibit No. 11 - Calculation of Earnings Per Share Exhibit 27 - Financial Data Schedule Exhibit No. 28 - Additional Exhibits (i) Revenues by Market Sector b. Reports on Form 8-K: There were no Form 8-K's filed for the third quarter of fiscal 1995. There were two Form 8-K's filed subsequent to the third quarter of fiscal 1995. On January 19, 1995 the Company confirmed that William R. Hoover, chairman of the board of directors and chief executive officer, will retire March 31, 1995 from his role as chief executive officer. He will be succeeded by Van B. Honeycutt, the Company's president and chief operating officer. On January 20, 1995 the Company disclosed summarized results of operations for the third quarter of fiscal 1995, in connection with its registration statement for the sale of 4 million shares of its common stock filed with the Securities and Exchange Commission on Form S-3 on January 13, 1995. -11- Signatures Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. COMPUTER SCIENCES CORPORATION Registrant Date: February 10, 1995 By:/s/Denis M. Crane Denis M. Crane Vice President and Controller Chief Accounting Officer -12- EX-11 2 EXHIBIT 11 COMPUTER SCIENCES CORPORATION CALCULATION OF EARNINGS PER SHARE (In thousands except earnings per share)
Third Quarter Ended Nine Months Ended _____________________ _________________________ Dec. 30, Dec. 31, Dec. 30, Dec. 31, 1994 1993 1994 1993 _________ _________ ___________ ___________ Net earnings before cumulative effect of accounting change $26,748 $21,676 $71,493 $58,105 Cumulative effect of accounting change for income taxes 4,900 _________ _________ ___________ ___________ Net earnings $26,748 $21,676 $71,493 $63,005 ========= ========= =========== =========== Shares: Weighted average shares outstanding 50,951 50,360 50,824 50,129 Common stock equivalents 1,554 1,192 1,510 1,057 _________ _________ ___________ ___________ Total for primary and fully diluted calculation 52,505 51,552 52,334 51,186 Earnings Per Share: Earnings per common share before cumulative effect of accounting change $0.51 $0.42 $1.37 $1.14 Cumulative effect of accounting change for income taxes 0.09 _________ _________ ___________ ___________ Primary and fully diluted* $0.51 $0.42 $1.37 $1.23 ========= ========= =========== =========== * The fully diluted calculation is submitted in accordance with Regulation S-K item 601 (b) (11) although not required by footnote 2 to paragraph 14 of APB Opinion No. 15 because it results in dilution of less than 3%.
EX-27 3
5 1000 MAR-31-1995 APR-2-1994 DEC-30-1994 9-MOS 28,479 0 839,814 37,449 0 915,849 809,253 364,600 1,960,126 681,590 309,009 0 0 51,205 846,996 1,960,126 0 2,354,532 0 1,865,918 119,644 11,436 18,470 115,497 44,004 71,493 0 0 0 71,493 1.37 1.37
EX-28 4 EXHIBIT 28 COMPUTER SCIENCES CORPORATION REVENUES BY MARKET SECTOR ($ in millions)
Fiscal Period Ended % of Total _____________________ _________________________ Dec. 30, Dec. 31, Dec. 30, Dec. 31, 1994 1993 1994 1993 _________ _________ ___________ ___________ Third Quarter U.S. Federal Government: Department of Defense $204.0 $167.6 25 % 27 % NASA 81.4 54.6 10 9 Civil agencies 82.4 61.6 10 10 _________ _________ ____________ ____________ Total 367.8 283.8 45 46 _________ _________ ____________ ____________ Commercial: Domestic 285.0 255.4 34 41 International 175.1 82.2 21 13 _________ _________ ____________ ____________ Total 460.1 337.6 55 54 _________ _________ ____________ ____________ Total revenues $827.9 $621.4 100 % 100 % ========= ========= ============ ============ Nine Months U.S. Federal Government: Department of Defense $604.6 $519.2 26 % 28 % NASA 219.4 163.2 9 9 Civil agencies 243.9 195.2 10 10 _________ _________ ___________ ___________ Total 1,067.9 877.6 45 47 _________ _________ ___________ ___________ Commercial: Domestic 812.2 764.9 35 42 International 474.4 209.3 20 11 _________ _________ ___________ ___________ Total 1,286.6 974.2 55 53 _________ _________ ___________ ___________ Total revenues $2,354.5 $1,851.8 100 % 100 % ========= ========= =========== ===========
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